The Great Shuffle. The Great Resignation. The Big Quit.
Mainstream media has been filled with discussion lately about this phenomenon emerging from the US. Commentators have been eagerly debating the likelihood of the same mass movement here in Australia in 2022.
Broadly, we are yet to see it manifest on our shores. Resignation sentiments are still low, yet recruitment activity has increased. The Australian Bureau of Statistics reports that the numbers of employees who did not expect to be with the same employer in 12 months was only slightly higher in August 2021 as it was in February 2020.
However, The National Skills Commission’s Recruitment Experiences and Outlook Survey for October 2021, reported an increase in recruitment activity along with an increase in difficulty recruiting. Industry recruiters in Sydney are reporting one of their busiest periods for years and for financial advice it is predominantly the employers not the employees driving the current activity.
Add in the non-pandemic financial services events of the past couple of years. The industry has faced the sale or exit of large institutional licensees and the closure of bank advice channels. We’ve seen increasing costs to serve from the additional documentation required by latest regulations. Deadlines are looming from the rising educational standards.
Much has been written about the decreasing adviser numbers due to this perfect storm. According to Adviser Ratings, adviser numbers have fallen below 19,000 in 2021 from a peak of over 28,000 in 2018. Our great resignation, it seems, has been going on for years.
If we look to predict the pandemic effect on the advice industry, then, a quick look at the US highlights that worker movement has been driven by four key factors: a backlog of natural resignations, burnout from little vacation leave, home-schooling and a lack of work-life balance, a desire to keep remote working benefits on a permanent basis and the increased urgency to follow your dream after the shock of realising that the world could change at any moment.
It is entirely plausible that employees in advice businesses in Australia are experiencing the same pandemic hangover. There is nothing to suggest a slowdown in the pace of the exit of advisers from the profession.
The problem does not appear to be compounded by new entrants to the industry. The uptake in university units related to financial planning is nowhere near the numbers required to combat overall adviser exits, and the evidence suggests existing advisers studying to meet approved degree requirements make up a portion of those enrolments. The FPA reports that student memberships have risen from 939 in 2018 to 1257 in 2021 but again, this is just a fraction of the numbers exiting.
The war for talent is not new but the advice industry now faces a larger talent crisis because the cyclical exit of advisers that each new wave of regulation drives has occurred concurrently with a global shift in work force thinking due to the pandemic. Employers who have not focused on retaining and building their professional ranks are in for a bumpier ride.
McKinsey published research in September 2021 that provided an easy roadmap for turning a possible Great Resignation into the Great Attraction. Key themes in the research related to the existing reasons workers in the US are resigning. What surprised researchers was the craving for the human elements of work despite workers actively seeking hybrid or remote working models.
The research explores the reasons why employees resign versus the reasons why employers think employees leave. Over and above the current resignation themes of wanting work-life balance, flexibility and potential for advancement, their research showed that a sense of belonging is as important in the decision on whether to stay or go. Ranked right up there was also having caring and trusting teammates, being valued by your manager, and being valued by your organisation. If your firm has moved to a hybrid working model with a mix of home and office days, deliberately implementing remote supports for your firm’s culture could be a differentiator in 2022.
Another key marker can be found from the addition of a Professional Year in 2019 for new entrants. This is still developing as a structural offering for potential employees in many firms. Whilst this is in its relative infancy, those firms who can offer it can differentiate themselves in a competitive market.
The workforce has changed and the war for talent will partly depend on our ability to build productively around the new world. Good people in the right roles will keep good things happening for clients and firms and attrition can sometimes be exactly what is needed.
